Gujarat High Court rules against bypassing mandatory condition
Gujarat High Court rules against bypassing mandatory condition
The appellant was provided relief while the Central Board of Excise and Customs department was held accountable
The Gujarat High Court has held that the revenue department cannot ignore the mandatory requirement of pre-consultation notice the origin of the show cause notice is the intelligence gathered from the Additional Director General (ADG), Goods and Services Tax (GST).
The appellant, a factory unit of Larsen & Toubro Limited, demerged its Hydrocarbon Division as a growing concern to a separate legal entity. Following this, the excise department sent a show-cause notice to the company in December 2018, raising the demand of Rs.19,61,06,399 as excise duty.
The appellant argued before the court that the impugned show-cause notice and the order were without jurisdiction in the absence of the pre-show cause notice consultation in accordance with the March 2017 Central Board of Excise and Customs (CBEC) Master Circular.
But, while defending the order, the department contended that pre-consultation was not mandatory, as the case originated from the investigation by the ADG, GST.
However, allowing relief to the appellant, Justice JB Pardiwala and Justice Nisha M Thakore observed that merely because the case originated on account of the investigation of GST (Intelligence), it was not a sufficient ground for not following the mandatory procedure prescribed by the Board.
The court ruled, "It is mandatory for the adjudicating authority to conduct the pre-show cause notice consultation. In absence of the same, the proceedings are bad in law and deserve to be quashed. The department is not correct in its stance that consultation was not necessary as the impugned show-cause notice is for preventive/related to an offence. Just because the origin of the show cause notice is the intelligence gathered from the Additional Director General, it would not bring the show cause notice within the ambit of preventive/offense."
